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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 28,322 22,421 20,300 61
         
GNI per capita
 US $ 5,350 4,640 4,550 70
Ranking is given out of 208 nations - (data from the World Bank)

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Update No: 152 - (20/01/10)

2009 a year of political turmoil for Croatia
In the course of 2009 the Croats lost a prime minister in Ivo Sanader in the summer and a president in Stipe Mesic at the end of the year.

The former resigned in favour of his protégé, Jakandra Kosor, in June. Many thought this was to prepare himself for a presidential bid in elections later in the year. But he did not stand. Nor did Mesic, who was forbidden by the constitution to do so.

The Demiurge of Dalmatia
Croatia was once the heartland of a major province of the Roman Empire, Dalmatia. Several great Roman emperors hailed from there, notably Diocletian and Constantine, who converted the empire to Christianity.

Suitably enough Croatia became a staunch redoubt of Roman Catholicism. It cleaves to Rome in the shape of the Vatican.

It would now dearly love to join up to the product of the Treaty of Rome in 1957, then called the Common Market, now the European Union (EU). As the Demiurge of Dalmatia, it has as much right as anybody to do so.

With its border dispute with Slovenia out of the way, Croatia's eventual entry into the EU is now all but certain because of its accession's symbolic importance to the rest of the turbulent Balkans. Diplomats and analysts said even if some reforms lag, Croatia should make swift progress to joining the group, which will go a long way to boosting investor confidence and reviving stalled EU ambitions across the region.

Close to the finishing line
“Some time during the next nine months one will be able to finish the talks. Croatia has made a great effort already, it's a great transformation. One must not forget that only 15 years ago we had a war here," a senior EU diplomat in Zagreb said. All of the countries that emerged from the former Yugoslavia and Albania aspire to join the EU, but with the exception of Slovenia which joined in 2004, they are far behind Croatia, a country of 4.4 million. Its Adriatic coastline lures more tourists annually than its own population.

Croatia's EU membership talks were put on hold for 10 months after Slovenia vetoed membership over an old border dispute, but the two reached agreement in September. Conclusion of the accession talks, which resumed on October 2, will be followed by ratification by the individual EU parliaments which will take about one year. "Of course, Croatia will not have implemented all the reforms, just like all the other ex-communist countries didn't. It will do what it takes to conclude the talks," said a Western diplomat in Zagreb.

Yugoslavs once considered themselves better off than citizens of other Communist countries in Eastern Europe. But with the exception of Slovenia, they fell far behind after the ethnic and religious wars of the 1990s devastated the region and created a post-Cold War crisis for Europe. The EU hopes the prospect of membership will help to persuade the other former Yugoslav republics to put the 1990s and all their potentially explosive rows behind them. "What is actually making many EU countries positive, even if there are problems (in Croatia), is that it can be a showcase, an inspiration for the whole region," the EU diplomat said.

Gazprom into Croatia
Interviewed in the January 12 issue of Southeast European Times, Gazprom Vice-President (and Gazprom Export chief) Aleksandr Medvedev unveiled a programme of business expansion throughout that region, with a distinct focus on Croatia.

Ahead of Croatian Prime Minister Jadranka Kosor’s imminent first visit to Moscow, Medvedev offered to build an extension of the South Stream pipeline into Croatian territory.

Croatia’s retiring President Stjepan Mesic helped prepare Kosor’s Moscow visit during his own recent valedictory trip there. Mesic is said to have been sounded out in Moscow (though “not during the official talks”) about chairing the joint company that would build South Stream in Croatia, if the country joins the project (Jutarni List, January 10, 11; RIA Novosti, January 10). Mesic has not commented on the reported Russian proposal to him. While in Moscow, Mesic had expressed regret at Croatia missing the chance to join South Stream and blamed the former government for this (EDM, December 18, 2009).

Russian Prime Minister Vladimir Putin and Gazprom will undoubtedly place this issue high on the agenda of Kosor’s visit. Croatia has been seeking for some time to increase its imports from Gazprom. Moscow, however, has asked that Croatia join South Stream as a precondition to an increase in gas deliveries.

The previous Croatian government had deemed that precondition unacceptable during 2007-2009. At that stage, Croatia was seeking 2 billion cubic meters (bcm) per year, not tied to South Stream’s construction. At present, however, Gazprom is unlikely to be able to come up with an additional 2 bcm. Its production figures are flat, its major fields past their peak, its imports from Central Asia down, and its existing contractual obligations take precedence over any new ones. Reflecting these constraints, Gazprom Chairman Aleksei Miller publicly entreated Azerbaijan on January 11 to sell “as much [gas] as it possibly can” to Russia, proceeding from the modest base volume of only 500 million cubic meters of Azerbaijani gas this year (Interfax, January 11).

Thus, Putin and Gazprom lack the leverage, or incentive, to nudge Kosor into joining South Stream when she visits Moscow. They only can (and probably will) offer to increase gas deliveries to Croatia for the future, after the South Stream pipeline will have been built and extended to this country. This seems fanciful, however. Moscow has never been able to identify the gas sources for South Stream when negotiating with consumer countries. The project’s overall costs, estimated in Moscow at more than $25 billion (before proposing a Croatian branch), far exceed any plausible limits (including the project costs to be borne by gas consumers).

Moscow would like Kosor to open the gates for Gazprom’s business expansion to the Adriatic. According to Medvedev in his interview, “Gazprom is interested in arriving at the Adriatic coast.” Having acquired Serbia’s Oil Industry (NIS), GazpromNeft proposes to move into Croatia. It seeks to use the Adria oil pipeline (JANAF) in reverse, for Russian oil exports, instead of Middle Eastern oil flowing into Central Europe from Croatia. Such a reversal would cut Central European countries’ access to international oil markets, leaving them even more dependent on Russian oil from the Druzhba pipeline.

As Medvedev observed in the interview, natural gas pipelines and liquefied natural gas (LNG) terminals cannot coexist in one and the same market. By offering a pipeline extension from South Stream to Croatia, Gazprom seeks to block the Adria LNG terminal project on Krk Island. That project can dent Gazprom’s monopoly in Central European countries. To preserve that monopoly, Gazprom is likely to ask to use Croatian transmission pipelines in return for bringing South Stream to Croatia.

In the Black Sea, hyping South Stream serves to discourage investment and political commitments to the EU-backed Nabucco project. In the Adriatic as in the Black Sea, South Stream is being deployed not as a supply project in a real sense, but as an anti-diversification project.

When Putin and Gazprom increased South Stream’s aggregate gas offer from 31 to 63 bcm, and its cost estimate from $9 billion to more than $ 25 billion within one year (2008 to 2009), with no feasibility studies and no gas earmarks, the project started looking like a political bluff. Medvedev is now upping the ante even further. In his South-eastern Europe interview he offered to add Romania as well as Croatia, Albania, and Montenegro to the South Stream customer countries. The apparent intention is to pre-empt LNG development along the Adriatic coast.

Meanwhile, Bulgaria is reconsidering its participation in South Stream and has suspended its implementation as far as Bulgarian territory is concerned. Gazprom’s countermove is to woo Romania again. It tries to hint that the South Stream seabed section’s landfall point (as it crosses the Black Sea from Russia) might be shifted from Bulgaria to Romania, if Bulgaria quits or stalls. Romanian media have widely reported Medvedev’s suggestion. The Romanian government (for the most part) and President Traian Basescu have all along assessed South Stream as an anti-diversification project and stayed out of it.  

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